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Economy in Brief

U.S. ISM Factory Index Falls to Lowest Level Since 2009
by Tom Moeller  December 1, 2015

Activity in the manufacturing sector declined last month according the Institute for Supply Management. Its Composite Index of factory sector activity fell to 48.6 during November from an unrevised October reading of 50.1. This was the lowest level since June 2009, the final month of the last recession. The decline compared to rough stability at 50.4 called for in the Action Economics Forecast Survey.

Declines in most component series were evident. The new orders figure fell to 48.9, the lowest level since March 2009 while the production reading also moved below break-even to 49.2. These declines reflected an effort to reduce inventories as the index fell to 48.0, down sharply for the second straight month.

These declines didn't keep manufactures from raising employment. The jobs index rose to 51.3, its highest level since July. During the last ten years there has been an 88% percent correlation between the index and the m/m change in factory sector payrolls. The supplier delivery index also edged up to 50.6, indicating the slowest delivery speeds in three months.

Weaker activity readings led to reduced pricing power. The prices index fell to 35.5, is lowest level since April 2009. Thirty percent (NSA) of respondents reported paying lower prices while just 1% reported them higher.

The export order index held steady m/m at 47.5, but was down from the 2011 high of 62.5. The import index nudged up to 49.0 and the order backlog index gained to 43.0.

The figures from the Institute For Supply Management (ISM) are diffusion indexes. A reading above 50 represents growth in factory sector activity. They can be found in Haver's USECON database. The expectations number is in the AS1REPNA database.

ISM Mfg (SA) Nov Oct Sep Nov '14 2014 2013 2012
Composite Index 48.6 50.1 50.2 57.6 55.7 53.8 51.7
 New Orders 48.9 52.9 50.1 62.1 59.0 56.9 52.9
 Production 49.2 52.9 51.8 62.6 59.2 57.5 53.7
 Employment 51.3 47.6 50.5 54.6 54.5 53.2 53.8
 Supplier Deliveries 50.6 50.4 50.2 57.0 55.0 51.9 50.0
 Inventories 43.0 46.5 48.5 51.5 50.8 49.4 48.2
Prices Paid Index (NSA) 35.5 39.0 38.0 44.5 55.6 53.8 53.2
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